PRL-rising back to profits

While FY12 profitability was marked by heavy exchange losses, Pakistan Refinery Limiteds financial performance leaped out of darkness during FY13. The Company was able to bag sales revenue worth Rs132 billion, a four percent increase year on year.
In FY12 the Company faced high international petroleum product prices and depressed refining margins which wrecked havoc on its earnings. However, stability in both prices and margins helped the Companys earnings move out of the red zone.
PRLs gross margins improved significantly from nothing to 1.48 percent in FY13 on account of better prices of crude oil and condensate. Note that oil and condensate consumption corresponds to around 99 percent of its cost of sales.
Similarly, net margins benefited from a 50 percent fall in finance cost during FY13. This was primarily due to stability in the rupee depreciation, which helped the Company contain margin attrition. And, unlike FY12 where the losses didn allow the Company to announce any dividends, PRL announced a final cash dividend of Rs2.85 per share (28.5 percent) for FY13.
Dividend aside, a major concern for the investors would be the losses worth Rs2.49 billion that the Company has accumulated as at June 30, 2013, resulting in negative equity. Also the Companys current liabilities exceed its current assets by Rs3.74 billion which significantly raises liquidity concerns for the Company.
In an attempt to ease some of the liquidity concerns, the refinery has issued two Term Finance Certificates (TFCs) for three and five years, worth Rs4 billion under the brand name of PRL Taraqqi TFC1 and TFC2, respectively, with Rs500 million as green-shoe option.
The Company plans to use the facility to finance its working capital requirement and capital expenditure. Some projects on the cards are the isomerisation plant, upgrading to Euro II standards, LPG plant and other storage and replacement requirements.

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PAKISTAN REFINERY LIMITED

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Rs (mn)                      FY13      FY12       YoY

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Net sales                 132,114   127,175        4%

Gross profit                1,949        29

Other operating income        186       376      -50%

Operating profit            1,588        13    11676%

Finance cost                  358       921      -61%

(Loss) / Profit after tax     496    (1,616)

EPS (Rs/Share)              14.17    (46.16)

Gross margin                 1.48%     0.02%

Operating margin             1.20%     0.01%

Net margin                   0.38%    -1.27%

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NIMIR INDUSTRIAL CHEMICALS LIMITED

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Rs(mn)              FY13    FY12     chg

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Sales               3002    2678     12%

Cost of sales       2499    2330      7%

Gross profit         503     348     45%

Operating profit     366     242     52%

Other income           6       8    -34%

Profit before tax    233     113    106%

Profit after tax     127     231    -46%

EPS (Rs)            0.57    1.05

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Source: KSE notice

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